By: Sakthi Prasad --
08 October, 2014
A major churn is happening in the detergents market. And it's got everything to do with a key ingredient without which washing powder and liquids, as we know them, won't exist.
There is no one type of this key ingredient; rather this particular ingredient can take many shapes and forms. Well, enough of beating around the bush.
Linear Alkylbenzene Sulfonate (LAS) is a type of ingredient that has been the darling of the detergents industry for the past 50 years. What precisely does LAS do? Simply put, LAS removes dirt and stain from your clothes.
The world of chemicals is a one of strict hierarchies. A particular chemical, for example, is always produced from another and very rarely they switch places in the value chain.
In the same spirit of hierarchy, LAS is produced from benzene, a petrochemical feedstock. This means LAS cannot precede benzene; instead it's the benzene that always begets LAS.
Owing to intricate hierarchical dependencies in the world of chemicals, category managers often have to bear the brunt of price volatility. How are they two related? Let us explore.
Production of LAS is dependent on the availability of benzene, which in turn is dependent on other feedstocks for its own conception. Now price of benzene is a function of its demand and supply as well as the price of its own feedstock. And any price disruption at the top of the pyramid ricochets across the entire value chain.
Lately, petrochemical feedstocks in general and benzene in particular are experiencing price volatility. And this is causing turbulence for category managers who are in charge of procuring LAS.
Besides price volatility, there is an increasing awareness to use "green chemicals" as opposed to those that are produced from hydrocarbon feedstocks. This is also affecting the LAS market.
"Green chemicals" are those that are produced out of plant- or animal-based feedstocks and are known as oleochemicals. In this category, there are alternatives for LAS such as Alcohol Sulfate/Alcohol Ether Sulfate (AS/AES), Fatty Alcohol Ethoxylate (FAE) and Methyl Ester Sulfonate (MES) -- stain removing oleochemical molecules that are produced out of palm/palm kernel oil and other plant-based feedstocks.
Though LAS accounts for 32 percent of the share of the global surfactants market, there is still potential for companies to go for oleochemical-based substitutes. Planning for such substitutions can effectively ring-fence category managers from price and supply volatility.
During the Webinar scheduled for Oct. 15, Beroe analyst Pushan Pal, Anionic Surfactants Expert, will spell out why large consumer goods companies should not adopt a "one size fits all" approach when it comes to procuring surfactants.
In other words, Pal advocates that companies should not fully opt for either LAS or other oleochemical molecules across the globe. For example, it won't be advisable for a company to use LAS across the globe; instead it can go in for LAS in region A and oleochemical molecules in region B. Of course, there are a number of factors that decides which type of ingredient should be used in a particular region. And such insights will help category managers in making the right procurement decision.
How effective are oleo-based molecules compared to LAS in detergent applications?
Which region(s) are suitable for oleo-based molecules?
Future supply- demand scenario for palm kernel oil
How switching to oleo-based alternatives will help companies to tackle rising cost of petrochemical raw materials?
What should be the procurement strategy of detergent manufacturers in selecting LAS vis-A -vis oleo-based alternatives for different regions across the globe?
To watch the discussion, please click here